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Thursday, July 30, 2015

Health Spending Growth Moderate in Second Quarter (Maybe)

A recent report
by actuaries working for the Centers for Medicare & Medicaid Services
estimates that the rate of growth of health spending, subdued for many years,
is picking up again: “The health share of US gross domestic product is
projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024.”

Comparing Q2 2015 to Q2 2014, GDP increased by $570.5
billion, of which $106.7 billion was health services. That’s about one dollar
in every five.

Comparing Q2 2015 to Q1 2015, health spending growth looks a
lot tamer: $21.6 billion of $191.2 billion GDP growth. That is only one dollar
in ten, about half of what it has been running at. However, the advance
estimate is subject to significant revision. Last quarter’s slow growth of
health spending may be idiosyncratic and/or inaccurate.

Technical note: When I discuss health services in
these quarterly GDP releases, I mean only health services. I do not include purchases
of medical equipment, or facilities construction. While I include Medicare and
Medicaid, I do not include Veterans Health Administration or other government
benefits. So, these dollar figures undercount
the amount of our economy consumed by the government-health complex.

(See: Measuring the
Economy: A Primer on the GDP and the National Income and Product Accounts,
Bureau of Economic Analysis, October 2014, pages 5-2 and 5-3; Micah B. Hartman,
et al., “A Reconciliation of Health
Care Expenditures in the National Health Expenditures Accounts and in Gross
Domestic Product,” Research Spotlight, Survey
of Current Business, September 2010, pages 42-52.)